How Long-Term Care Insurance (LTC) Can Save Your Life

This article on Eldercare is provided by Everplans — The web's leading resource for dealing with death. Create, store and share important documents that your loved ones might need. Find out more about Everplans »

Long-Term Care Insurance (LTC) can provide care and services if you should become unable to manage your own care due to disabling medical, physical, or cognitive conditions.

Reasons For Purchasing Long-Term Care Insurance

Long-Term Care Insurance (LTC) can help you pay for the care you need should you no longer be able to care for yourself, ensuring that you are not a burden to your family and that you get the services you need.

Statistically, at least 70% of people above the age of 65 will require some amount of long-term care, which means that most seniors should be prepared to enter and pay for long-term care at some point. Without insurance, the costs of long-term care can be incredibly expensive, and can quickly deplete any savings.

As long-term care is very expensive, it’s a good idea to look into long-term care insurance (either as a policy or as a rider on a Term life insurance policy) to help you cover the costs of care and to avoid going broke trying to take care of yourself in old age. LTC insurance can significantly reduce the cost of care, as well as protect other assets against being spent on LTC. In addition, if you have any anxiety around being able to cover the cost of care that you think you might need, LTC insurance can help relieve that anxiety, as you can feel confident knowing that you'll be taken care of in an affordable way.

Does Health Insurance Cover Long-Term Care?

While some health insurance policies may cover some of the costs of long-term care, most health insurance policies, including Medicare and Medicaid, will not pay for a full range of LTC services. A certain amount of “skilled nursing” (short-term care in a nursing home) is usually covered by health insurance, Medicare, or Medicaid, but this does not include home care or assisted living facilities. LTC insurance can make sure that if you need long-term skilled nursing care, you can afford that care.

Long-Term Care Insurance Cost

LTC tends to be fairly expensive, and should only be purchased if the policyholder has the ability to pay the annual premiums on the policy. LTC policies are generally most affordable if purchased before age 60, as the insured’s age plays a role in determining the premium.

In addition, a long-term care policy has no “surrender” value, meaning that if you never require long-term care, the money that you've put into the policy is gone.

To learn about adding a long-term care rider to a life insurance policy, see our article Long-Term Care Rider.

Alternatives To Long Term Care Insurance

As we mentioned above, Long-Term Care Insurance costs are based on age, health, and quality of the policy and tend to be very expensive (costs ranging from $80-$125,000 are not uncommon). One alternative that's common for advisors to suggest is setting up an Irrevocable Trust because assets inside one of those aren't counted as assets available for your care. For more information check out this article: Long-Term Care Alternative Strategy, which was written by experts in the field from MyUltraTrust, a site that keeps us up-to-date regarding Irrevocable Trust news and information.

Did you find this article useful?

Sign up for our newsletter and get planning tips and resources delivered right to your inbox.